Premier Industrial Systems Integrator, UL-Certified Automation & Controls Firm

$5.0M

Revenue

$671K

SDE

3.6x

Multiple

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Full Editorial Writeup

This is a Midwestern industrial systems integrator that designs and builds custom control systems, plantwide SCADA solutions, and proprietary OEM equipment packages for industrial and infrastructure clients. The operation runs out of an 18,000-square-foot facility and includes an in-house UL508A/698A-certified panel assembly shop, which means the firm controls both the engineering and the physical manufacturing of the control panels it deploys. With 22 employees and roughly $5.04 million in revenue against $671K of SDE, this is a real project-based engineering business, not a lifestyle shop.

The company serves industrial and municipal/environmental infrastructure markets, the kind of clients who need automation to keep plants running and cannot easily rip and replace a system that has been custom-built around their processes. Management leans on a library of reusable core software and deep process expertise, which creates genuine switching costs and lets the team win repeat work from institutional accounts. Notably, all of this pipeline has been generated through word-of-mouth and technical credibility, with no dedicated sales force ever employed.

The founders are retiring, and the pitch is that key accounts are institutional rather than founder-dependent. That claim is the whole ballgame in diligence. If the relationships and the engineering knowledge truly sit with the 22-person team and the software library rather than in the founders' heads, this is a clean transferable platform. If not, a buyer is paying 3.58x for a business whose brain is walking out the door.

Why we like it

Earnings quality is strong for the size, with $671K of SDE on $5.04M of revenue, a roughly 13 percent margin that is healthy for project-based engineering work. The business is described as low-debt and high-cash-flow, and the 3.58x multiple on cash flow is reasonable if the earnings prove durable and not concentrated in one or two big projects.
The moat is real and physical, not just marketing. An in-house UL508A/698A-certified panel shop plus a library of reusable core software means the firm controls its own manufacturing and reuses expensive engineering, which is exactly what protects margins and creates the high switching costs the listing describes.
Industrial automation and SCADA are structural tailwinds, not fads. Plants reshoring to the US, aging municipal and environmental infrastructure, and the ongoing push to automate labor make control systems something buyers keep spending on, which is why this reads as recession-resilient rather than discretionary.
The operator advantage here is obvious and undervalued by the seller: the business has never had a sales force and still built a multi-million-dollar pipeline on word of mouth. A buyer who bolts on even a modest outbound sales function or a recurring service-contract model can grow the top line meaningfully off an already-warm reputation.

How to improve it

Introduce a structured service and maintenance contract model within the first 90 days. Right now the revenue is project-by-project, so converting existing SCADA and panel clients onto annual support agreements would add recurring, higher-margin revenue and materially raise the exit multiple.
Hire or assign a first dedicated salesperson to work the existing customer base and OEM channel. The firm has proven it can win work with zero outbound effort, so even one competent business developer chasing the untapped pipeline should produce quick, high-ROI wins.
Document and systematize the engineering IP before the founders leave. Turn the reusable software library and process expertise into codified standards, templates, and training so institutional knowledge is transferable and not locked in the retiring owners' heads.
Push the OEM equipment packages harder as a productized, repeatable revenue line. Proprietary equipment with locked-in channels scales better than bespoke integration work, so standardizing and marketing those packages nationally could lift both volume and margin.
Build a formal project pipeline and backlog tracking system to smooth revenue lumpiness. Project businesses live and die on visibility, so a disciplined CRM and backlog view helps forecast cash flow and reassures lenders and future buyers.
Cross-sell UL panel manufacturing to other regional integrators as a wholesale capability. The certified panel shop is a scarce asset, and selling that capacity to competitors who lack it turns a cost center into a standalone profit line.

Diligence notes

Verify customer concentration and project lumpiness. With $5M of revenue on project work, a single large plant automation job can distort a year, so pull three to five years of revenue by customer and by project to confirm the earnings are broad-based and repeatable.
Stress-test the founder-independence claim directly. The entire thesis rests on accounts being institutional rather than founder-dependent, so interview key clients, map who holds the relationships and the engineering knowledge, and structure an earnout or transition period to protect against the founders being the real moat.
Confirm the retention and depth of the 22-person team, especially senior engineers. This is a knowledge business, so review compensation, tenure, non-competes, and any key-person risk, and budget for retention packages to keep the elite project team through and after the transition.
Clarify the real estate situation, since the building is owned but the price treatment is not disclosed. Determine whether the 18,000 sq ft facility is included, excluded, or leased back, because that changes both the multiple and the ongoing occupancy cost the buyer will carry.
Scrutinize the SDE add-backs and normalize for a market-rate replacement of the two founders. If the founders were doing billable engineering or sales work, the true adjusted earnings after hiring to replace them could be lower, which directly affects the 3.58x you are actually paying.

Source

Originally listed on BizBuySell. View original listing →